In "The Big Banks," Citigroup lowers the target price for Baozun to $2.70 and maintains a "Hold" rating

Citi published a report stating that Baozun-W (09991.HK) third-quarter performance overall met expectations, with total revenue increasing by 4.8% year-on-year to RMB 2.2 billion (same below). Product sales grew by 8.9% year-on-year, but fell short of the bank's estimate of 9%, mainly due to the drag from home appliances, although the beauty category continued to show healthy growth. Service revenue increased by 5.8% year-on-year, exceeding the bank's expectations by 3%, benefiting from improved performance in the apparel and luxury goods categories. Baozun's core e-commerce business remained profitable, with a net profit of RMB 28 million.

Citi indicated that due to the company's proactive reduction of certain low-margin SKUs and brands in its direct sales business, it has lowered its adjusted net profit forecasts for the fiscal years 2025 to 2027. At the same time, it has reduced the target price for Baozun (BZUN.US) on the US stock market from $3.4 to $2.7, maintaining a 6 times price-to-earnings ratio valuation for the fiscal year 2026 and maintaining a "Hold" rating